Wednesday, July 11, 2012

USDA Does the WASDE Just Right: Corn Pops, Drops, reverses

We had an earlier post on the WASDE that disappeared into the ether. If I recall correctly corn was up 23 cents at the time. Corn is now down 9 cents at 7.085.

Over the last few years one of the problems market participants have complained about is the USDA's slow, measured response to rapidly changing conditions.
So traders have taken this into account and projected the trend from report to report: If yield (bushels per acre) is up 5 bu. in the June report traders project that yield will be up again in the July and August reports and position themselves accordingly.

Today that changed.
Participants were looking for a WASDE number lower than their internal projections and when he USDA came in with a cut in yields of 12% resulting in a 1.8 billion bushel drop in supply they said "Crap, now everyone knows."

Yes, here at station W-EAT it's all wheat, all the time.*
From The Progressive Farmer's Market Matters blog:

...Reuters cited Rich Feltes at MFGlobal, who said he thinks wheat futures will get to $7. Feltes was quoted saying, "Structurally,
everybody has been leaning the wrong way, and now you'll have every
doctor and dentist wanting to own a piece of this (wheat market)
now."...

*When MarketBeat gets around to putting up a wheat post we should be looking for a lock limit-down day...